Big Biz Bob’s Corporate Tax Cuts Hammer Students, Families

The New York Times reported this week that the state of Louisiana paid corporations $1.79 Billion last year in tax exemptions and incentives. If you want to see who’s getting that money, click here.

The Louisiana Department of Revenue explains in their Tax Exemption Budget reports that, “Tax exemptions are tax dollars that are not collected and result in a loss of state tax revenues available for appropriation. In this sense, the fiscal effect of tax exemptions is the same as a direct fund expenditure.” That is, dollars given away on tax exemptions and incentives are state tax dollars that can’t be used for other purposes.

Tuition Hikes Replace State Support

Last week we showed you the big fiscal picture of higher education in Louisiana. Governor Jindal has cut more than $600 Million in state funding for higher education and made up part of that with $390 Million in increases in tuition and fees on state campuses across Louisiana.

Some of those cuts in funding have occurred as a result of mid-year shortfalls in state revenues. Using the Department of Revenue’s explanation about the nature of tax exemptions, there is a connection between the exemptions the state gives corporations and the lack of funding available to meet other state government needs.

Board of Regents data show that tuition and fees for Louisiana residents for 12 hours per semester of classes at institutions in Louisiana’s three university systems have increased between 44% and 54% during Jindal’s tenure.

This is not an accident; it is a conscious shifting of the burden of higher education costs onto students and their families in the face of state funding cuts linked to exemptions and incentives given to corporations by the Jindal administration. The higher tuition is being used to keep the institutions open, not improve them.

Overcoming Obstacles to Opportunity

We are a poor state. The median household income in Louisiana averaged $44,086 for the five-year period that ended in 2011, according to the U.S. Census Bureau. That is nearly $9,000 below the national average. 18.4% of our residents live in poverty, compared to 14.3% across the country. It stands to reason, then, that rapidly rising college tuition would have an impact on students ability to pursue their higher education dreams.

Venese Morgan is a native of California whose father graduated from Southern University before heading west. Venese was able to attend Southern based on Pell Grants and financial aid.

“The last semester of my junior year in 2010 was the first semester I had to apply for a Parent Plus Loan, which was an extended loan on top of the loans I had already applied for,” Venese said. The tuition increase that Venese felt came before passage of the GRAD ACT in 2010, which gave Louisiana university systems and campuses the ability to raise tuition by 10% per year if they met certain milestones and benchmarks on student achievement.

“By the time I was in my final semester, I had $6,000 left in financial aid but my tuition was well over $10,000,” Venese said. “So, my final Parent Plus Loan was for $4,500. It had jumped from $1,500 to $4,500 in a little over a year.”

Bobbi Alvarado is a sophomore Business Major at LSU. She grew up in Texas but decided she wanted to attend LSU and build her own life in Louisiana. She started out paying out-of-state tuition but had heard that after establishing residency here, students were eligible to qualify as a resident student.

Faced with steadily rising tuition and unable to meet the in-state earned income requirement to be declared a Louisiana resident for university purposes, she was forced to skip this fall’s semester. When Jindal took office in 2008, out-of-state tuition on the LSU Baton Rouge campus was $12,958; this academic year, those fees are $22,218 — a 71% increase!

Bobbi is using her time away from LSU to hit those earned income requirements that will enable her to qualify for in-state tuition rates. Her goal is to become a teacher. Governor Jindal’s tax exemptions and rising tuition makes achieving that goal a little tougher each year. Bobbi Alvarado is determined to overcome the obstacles Bobby Jindal is erecting in her path.

No Relief In Sight

Governor Jindal has already announced that revenue neutral tax reform is his top priority heading into 2013. If that comes to pass, it will be more bad news for Louisiana students and their families. “Revenue neutral” tax reform would lock in state revenues at current levels. Fearing additional mid-year budget cuts, four-year colleges and universities want the ability raise tuition without going to the Legislature. Essentially they want the ability to tap students and their families as an alternative to dwindling state support.

With tuition costs already growing faster than incomes in Louisiana, the likelihood is that more people like Bobbi Alvarado will have their higher education aspirations priced beyond their reach. If you think TOPS is enough to help, remember that it is funded through the state General Fund. After five years of rapid growth in corporate income tax exemptions, the ‘help’ that students and families get from TOPS comes increasingly from themselves, through the taxes they pay.

No one disputes the value of a college education, but with Jindal’s pedal to the metal on tuition costs in Louisiana, we might hit an inflection point where the upfront cost of the investment deters people from making it. That would send Louisiana into uncharted waters, leaving residents here with no clear route to the American Dream.